Spanish tax reforms for 2015

The Spanish Government has recently published a new tax reform, which includes reforms in Corporate Income Tax, Personal Income Tax and Non-Residents Income Tax.

The changes took effect from 1 January 2015.

In this article we will focus on the changes affecting individuals.

Non-Residents’ Tax Rates

It is proposed that the general income tax rates for non-residents will be 24% for 2015.

Impatriate Regime (‘Beckham Law’)

Taxpayers under the Special Tax Regime for inbound assignees will be subject to the following tax rates as of 2015:

Corporation Tax

Please note that this article does not discuss other proposed changes provided for in the draft law, such as those relating to the Corporate Income Tax – although, it is important to note the government aims to lower corporation tax rates from 30 percent to 28 percent in 2015 and to 25 percent in 2016.

The new companies set up in 2015 will have a reduced Corporation tax for two years of 15%.The New companies will have reduced corporation tax until 15% the first two years, if they maintain some requirements investment regarding employees and turn over.

Savings Income Tax

The income tax rate is reduced from 27% to 24% in 2015 and to 23% in 2016. Savings income is increased from 24,000 EUR to 60,000 EUR

Withholdings

1) New withholding percentages for Self Employees will be established for work income as follows:

• The tax withheld from invoice payments currently 21% is reduced to 19% from 2015 and 15% from 2016.
• The workers who get less than €15,000 in the previous tax year, and this represents more than 75% of their income, a reduction to 15% for 2014 was already announced.

2) New withholding percentages for renting, now is 21%, in 2015 will be 20% and in 2016 19%.

Tax Relief on Rental Payments

The 10.05% relief on Rent paid previously available to anyone earning less than €24,107 p.a will not be available on leases signed after 31st December 2014.

The 100% relief on rental income in respect of properties rented to tenants under 35 is not available from 1st January 2015. Relief at 60% is still available for all tenants, including under 35’s.

Personal Income Tax

With regards to Personal Income Tax, one of the most important measures is that the tax reform lightens the tax burden, first by reducing the number of tax brackets from seven to five; the minimum tax rate is also reduced from 24.75% to 20% in 2015 and 19% in 2016 and the maximum tax rate is reduced from 52% to 47% in 2015 and 45% in 2016. Moreover, taxpayers earning less than 12,000 euros per year will be exempted of tax as per January 1st 2015

The S.L. Administrator’s Salary

The most important change this time was, the administrator´s salary, they have been paid by payslips every month until now. After the change they need also to be register in the Tax Office as a self employee and they will start invoicing after 1st January and submitting quarterly taxes every quarter, charging IVA and IRPF in every invoice.